'I'm worried my financial affairs will be thrown into chaos': Everything you need to know about the transfer of Lloyds customers to the Co-op

Five million Lloyds customers are being transferred to the Co-operative Bank as part of a sell-off of 632 branches.

The shake-up will make the Manchester-based Co-op Britain’s sixth-largest bank.

Some customers at those branches affected have already started to receive letters about the change. Many fear they face having to travel further for their day-to-day banking if they want to stick with Lloyds.

They also worry the shift could leave
them in limbo, blocked out of the best deals and with no one to complain
to if something goes badly wrong.

'I DON'T WANT TO CHANGE BRANCHES AFTER 40 YEARS'

Brian Thomson-Bialy fears his 88-year-old mother’s financial affairs will be thrown into chaos when the Lloyds branch where she has banked for 40 years is handed to the Co-operative.

Mr Thomson-Bialy, 67, says his mother, Maureen Calder, wants to stay with Lloyds. But she has been told if she switches from her branch in Romsey, Hampshire, to the nearest one in New Milton, 20 miles away, she must close and then re-open each of her three accounts. Her son, a retired RAF officer, says: ‘I understand Lloyds has to abide by the rules of the deal. But my mother feels the way she is being treated is a slap in the face.’

A Lloyds spokesman says: ‘Mrs Calder need not worry as nothing is going to happen with her accounts or services for some time. Additionally, we do not yet know for certain whether she will be transferred.’

Once the Co-op deal is secured, the spokesman added, Lloyds will be able to announce the options it will offer to customers who don’t wish to transfer.

HOW YOU GOT SOLD FOR A KNOCK-DOWN £350M

In 2008, Lloyds was saved from collapse in a £37 billion state-funded bailout that gave the taxpayer a 41 per cent stake in the bank. But in return for the cash, according to European competition laws Lloyds had to sell off 632 of its branches by November 2013.

In July, the Co-op, Britain’s biggest mutual, emerged as the winner of a lengthy bidding process.

It snapped up the branches at a rock-bottom £350 million upfront — despite Lloyds receiving another £1.5 billion offer from start-up NBNK. The Co-op will later pay another £400 million based on the business’s performance.

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WILL MY BRANCH BE AFFECTED?

You can see if your branch will be handed over by checking online at lloydstsbtransfer.com. Lloyds also plans to post a list of affected locations in all its branches.

In all, 283 Lloyds TSB branches in England and Wales will move over to the Co-op along with 164 branches of Cheltenham & Gloucester (C&G) and 185 Lloyds TSB Scotland branches. Five million Lloyds customers associated with these branches will also become part of Co-op.

There is no hard and fast rule about which type of customer will move, though generally it will be those with a current account registered with a particular branch.

This adds another layer of confusion. Lloyds will hang on to 200,000 customers whose branches are changing, most of whom hold business accounts.

They will need to have their sort code changed and it is these customers who are being notified of the changes at present. As well as current account holders, some customers who just have mortgages or credit cards with Lloyds may also move.

Sell-off: 632 branches of Lloyds are set to become part of the Co-operative Bank

THE RETURN OF TSB TO THE HIGH STREET

The final details have not been thrashed out, nor the contracts signed. But, if all goes to plan, from November affected Lloyds customers may start to be notified about the changes.

A few months later, customers should receive more details about how they will be affected.

However, before the Co-op can take ownership of the 632 branches, they must exist as a separate bank.

So from spring 2013 the Lloyds branches will be renamed TSB, but will carry on business as usual.

Although TSB will technically still be owned by Lloyds, it will run entirely separately.

Customers who are with TSB won’t be able to use Lloyds TSB branches and vice versa. Then, from November 2013 — if all goes to plan — TSB will finally separate and become owned by the Co-op.

WILL MORTGAGE RATES CHANGE?

BOTH banks have promised that affected customers will not experience too much upheaval. Lloyds has said it will keep all of its products the same until the Co-operative takes it over.

But after this point the future of customers who enjoy the best deals with Lloyds is not yet clear.

For example, an estimated 520,000 homeowners enjoy one of the cheapest mortgages in Britain.

According to the terms of the deal, their standard variable interest rate can never be more than 2 per cent higher than the Bank of England base rate — at the moment this is currently 2.5 per cent.

By contrast the Co-op’s SVR is nearly double that at 4.74 per cent. Lloyds customers who are signed up to the bank’s Vantage current account also receive some of the best rates of in credit interest.

However, Co-operative current account holders benefit from some of the best overdraft interest rates at 18.9 per cent.

WHAT IF I DON’T WANT TO MOVE?

If your branch is being transferred to the Co-op and you’re keen to stay put, you will be able to add your name to a list of unhappy customers as soon as the deal is completed.

However, whether this will make any difference is not yet clear.

Alternatively, you can switch to a Lloyds branch that is not being sold.

Crucially, though, you can’t simply transfer your account — you will have to shut your existing account and open a new one.

If you are a Lloyds mortgage customer on a good interest rate, but not a fixed deal, who is unhappy about moving to the Co-op, it is also not clear whether you will have to reapply for your home loan with Lloyds or wait to see what the Co-op offers.

Specially recruited staff at TSB should, in theory, be able to deal with any problems at that point.After the deal is completed the customers’ records will be passed over to the Co-op, which will be responsible for solving any customer issues — even if it’s with a Lloyds account or mortgage.

WILL THE CO-OP’S SERVICE SUFFER?

The Co-operative promises that customer service won’t be affected as a result of it taking on more branches.

A spokesman for the bank says it would not make the move if it thought its quality of service would decline, and that because the Co-operative is a mutual it is not driven by profit in the same way as High Street banks.

‘We pride ourselves on our customer service,’ the spokesman says.

‘It’s also worth making the point that this is not an overnight move. We will do things slowly in stages.

‘We have enough time to make sure the transition goes smoothly and that all customers have a good experience.’

The bank has also taken the step of severing the link between branch staff’s pay and the number of bank accounts and insurance policies they sell.

Instead, staff will be given a quarterly bonus for good customer service.